EURODOLLAR Information

look for the thread

'ge anyone trading these?' in the misc futures forum.

most trading in this product is done via spreads - either against the cals or against other interest rate based products like the 5 year note.
 
I trade Eurodollar futures spreads.

The guys are right - front month outright Eurodollar contract sucks ass, and its also denominated in quarter ticks as opposed to half ticks for the rest of the Eurodollar delivery months - thats $6.25 a tick vs $12.50 a tick - just not worth it.

If you want to trade Eurodollars directionally rather than in the spreads then you are much better looking for charts you like further out along the curve.
 
Be careful what you wish for. Time to expiration is a factor in all the euro contracts, so, that would imply that the further out, the more the "Action". However, it is 40 contracts total, quarterly. Basically, each 4 contracts represent one year, with the second set of four the second year (the reds) and so on. The reds and Greens tend to trade in packs, and are very volatile. Any short term change in inflation outlook or job growth can have those move sharply, instantly, leaving you in the lurch if you are on the wrong side.

Outrights are tricky unless you know what they are trading against, and I suggest you figure out the fundamentals behind the contract - understand LIBOR and the Fed Funds contracts COLD. Those spreads are worth monitoring. Directional, lone contract euro trades appear to just "trend"...but they are usually mirroring the 2's, 5's, or just trend due to no changes in any short term outlook. Be careful.

It's not an index product, there is a fair amount of math in there. Don't just guess.
 
Quote from OddTrader:

http://futures.tradingcharts.com/chart/ED/96

http://futures.tradingcharts.com/chart/ED/C5

It seems for the same period the range of price moved roughly $1.05 vs $0.65 .
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Actually, 105bps vs 65bps, each bp or tick being $25, and neatly demonstrating KJ's warning. It's a contract with a lot of nuances involved, most basic to consider being the (expected) timing of Fed hikes and eases ahead.

Having said that, I get a daily e-mail comment from a veteran CME ED floor broker who analyses it purely using old-fashioned TA, and does a fairly decent job.
 
Quote from Arbitrageur:

I trade Eurodollar futures spreads.

The guys are right - front month outright Eurodollar contract sucks ass, and its also denominated in quarter ticks as opposed to half ticks for the rest of the Eurodollar delivery months - thats $6.25 a tick vs $12.50 a tick - just not worth it.
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I'm interested to learn financial spreads.

What ED months do people usually trade?

Do people choose the most liquid months, or (potentially) profitable ones, or else?
 
The spreads are seperately quoted markets, based on the differential between contract months - derived by subtracting the bid of one market from the ask of the other, depending on whether you want to be long or short the spread.

the spreads are deep and liquid, with volume diminishing as you go further out along the curve and on wider spaced spreads. Generally you would look at trades in the 3, 6, 9 and 12 month spreads since these are the most liquid, and generally tight to the bid/ask.
 
Quote from Arbitrageur:

The spreads are seperately quoted markets, ...
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Thanks for your feedback.

Are there any popular set-up for automated trading of spreads?

Quote from Arbitrageur:

the spreads are deep and liquid, with volume diminishing as you go further out along the curve and on wider spaced spreads. Generally you would look at trades in the 3, 6, 9 and 12 month spreads since these are the most liquid, and generally tight to the bid/ask.
More...

What months would be the best choice for Eurodollar spreads?

What would be the potential profitability relatively among the three spreads:

- Eurodollar vs Eurodollar, per your suggestion
- Swiss Franc vs Japanese Yen
- 10-Year vs 5-Year Treasury Notes?

In your experience of trading spreads, what was/were the best spread(s) and the returns (say 20% in one month time)?

TIA.
 
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